A wave of uncertainty over global trade talks pulled Wall Street lower on Monday, ending the S&P 500’s nine-day winning streak, its longest since 2004. All three major indexes finished in the red, with the Nasdaq and S&P 500 underperforming the Dow. Sentiment was shaken by President Trump’s tough talk on tariffs, including a surprise 100% levy on foreign films, and lack of direct negotiations with China. While stronger-than-expected ISM services data provided a brief boost, investors remained cautious ahead of the Federal Reserve’s rate decision on Wednesday. With conflicting signals on inflation and trade, markets are bracing for fresh insight from Fed Chair Jerome Powell.

Key Takeaways:

  • Dow Eases After Sharp Intraday Drop: The Dow Jones Industrial Average fell 98.60 points, or 0.24%, to close at 41,218.83 after dropping more than 250 points at session lows. Despite partial recovery, the index remained under pressure from tariff-related uncertainty, ahead of the Fed’s upcoming policy decision.
  • S&P 500 Snaps Nine-Day Rally: The S&P 500 shed 0.64% to end at 5,650.38, stopping its longest winning streak in two decades. Investors pulled back amid concerns over global trade negotiations, despite stronger than expected US services data from the ISM.
  • Nasdaq Retreats as Streaming Stocks Slide: The Nasdaq Composite declined 0.74% to 17,844.24, led lower by losses in major streaming stocks. Shares of Netflix and Paramount dropped following President Trump’s announcement of a 100% tariff on foreign-produced films.
  • Europe Mixed as M&A and Inflation Data Steer Moves: European stocks ended mixed as corporate activity, macro data, and regional central bank expectations shaped sentiment. The DAX in Germany gained 1.12%, supported by optimism over Erste Group’s 8.2% surge following its acquisition of a stake in Santander’s Polish arm. France’s CAC 40 declined 0.55% while Amsterdam-traded Shell dropped 1.9% after speculation it may acquire BP. Eutelsat surged 15% after announcing a new CEO. Swiss inflation came in at 0% year over year in April, below expectations, while Turkish inflation rose 3% on the month, pushing the annual rate to 37.86%. UK markets were closed for a bank holiday. 
  • Asia Mixed as Albanese Re-Elected and Taiwan Tumbles: Asian markets saw varied performance as political and economic developments unfolded across the region. Australia’s ASX 200 dropped 0.97% after PM Anthony Albanese secured a historic second term, signalling policy continuity but spurring modest market profit-taking. Taiwan’s Taiex plunged 1.23%, led lower by tech losses, though the Taiwanese dollar rallied sharply. India’s Sensex gained 0.37% and the Nifty 50 rose 0.45%, lifted by a broad Adani Group rally on reports of progress in resolving a US bribery probe. Adani Green, Power, Enterprises, Port and Energy all surged between 4.88% and 7.73%. Meanwhile, Indonesia’s Q1 GDP growth slowed to 4.87% year-over-year, missing estimates and marking the weakest pace since 2021. Most major regional markets, including Japan, South Korea, Hong Kong and mainland China, were closed for holidays.
  • Oil Hits Fresh Lows on OPEC+ Output Surge: US crude dropped 2.20% to $57.01, the lowest settlement since February 2021, after OPEC+ agreed to a second consecutive monthly production hike. The June boost brings total output increases to over 800,000 barrels per day, deepening concerns about oversupply amid slowing demand from tariff tensions. Brent crude also fell 1.86% to $60.15. Oil is down roughly 20% year-to-date.
  • Treasury Yields Rise Ahead of Fed Decision: The 10-year Treasury yield climbed to 4.35%, reflecting market caution over inflation risks and tariff fallout. Despite recent signs of economic stress, with weak GDP and import shifts, the Fed is expected to hold rates steady, with futures pricing just a 4.4% chance of a cut this week. The 2-year yield was little changed at 3.843%.
  • US Services Data Tops Estimates Despite Tariff Fears: The ISM services index rose to 51.6 in April, beating expectations of 50.4 and signalling expansion in the sector. New orders, employment, inventories and backlogs strengthened, though executives flagged rising concern about tariffs and supply chain instability. Imports tumbled 8.3 points after March’s surge to front-load purchases before tariffs.

FX Today:

  • EUR/USD Maintains Bullish Momentum, Trades Near Recent Highs: EUR/USD ended the session at 1.1317, up 0.16%, continuing to hover near its multi-month highs just below 1.1500. The euro remains well-supported by a steady uptrend that began in March, with price comfortably above all major SMAs. The 50-day average now rises at 1.0993, while the 100- and 200-day SMAs at 1.0691 and 1.0783 are also sloping upward. Monday’s release of the Sentix investor confidence index for May showed a strong rebound to -8.1, beating expectations of -11.5 and helping sentiment. Price action remains constructive, with consolidation above 1.1250 suggesting potential for a breakout. A sustained move above 1.1450 would likely spark upside momentum toward 1.1600 and possibly 1.1700.
  • GBP/USD Holds Gains, Consolidates Above Support: GBP/USD closed at 1.3293, inching up 0.19% on the day as it continued to consolidate recent strength following a sharp breakout in April. Price is holding above a key support zone around 1.3250, backed by bullish structure and rising short and long-term SMAs. The 50-day SMA stands at 1.3019, with the 100- and 200-day averages at 1.2741 and 1.2861, respectively, all supporting continued upside. Technical indicators suggest the pair is forming a potential bull flag, with shallow pullbacks viewed as constructive. A decisive push above the 1.3400 resistance would confirm continuation and open room toward 1.3550. Immediate downside risk appears limited as long as price holds above the 1.3000–1.3100 region.
  • AUD/USD Clears 200-Day SMA, Eyes Further Upside Extension: AUD/USD closed at 0.6469, rising 0.39% as the pair broke decisively above its 200-day SMA at 0.6461. The bullish breakout follows a steady recovery from April’s lows near 0.5900, and now places the pair above all major moving averages. The 50-day SMA is trending at 0.6305, while the 100-day stands at 0.6283, both now offering layers of support. Technical conditions suggest a change in longer-term trend, with the next upside target seen at the 0.6600 handle. Momentum indicators show no signs of exhaustion, and buying interest appears firm. Key support levels to watch include 0.6400 and deeper at 0.6300, with any dip likely to attract buyers looking to rejoin the emerging uptrend.
  • USD/JPY Breaks Lower, Struggles Below Key Moving Averages: USD/JPY dropped 0.81% to finish at 143.78, extending its recent pullback after failing to sustain a bounce late last week. The pair remains firmly below its 50-day SMA at 146.73, the 100-day at 150.85, and the 200-day at 149.73, a bearish alignment that continues to pressure the downside. Sellers have regained control after last week’s failed attempt to reclaim the 146.00–147.00 zone, with momentum indicators pointing south. Price is now approaching support near the April lows around 141.00, and a break below this level could open the door to further declines toward 140.00 or even 139.00. Bulls would need a decisive close above 147.00 and the 100-day SMA to reverse the current bias.
  • Gold Rallies Strongly as Bulls Regain Control Above $3,300: Gold surged 2.81% to settle at $3,331.81, bouncing back sharply after a brief pullback last week. Buyers stepped in firmly near the $3,240 level, reclaiming short-term control and reinforcing the broader uptrend. The metal remains above its 50-day SMA at $3,094.50, with longer-term trendlines, the 100-day at $2,918.42 and 200-day at $2,756.57, continuing to slope upward. Monday’s rally signalled strong bullish intent, with the rebound from support confirming that the recent dip was likely a healthy correction. Resistance lies at $3,350, with a break above this level paving the way for a retest of highs near $3,500. On the downside, initial support remains at $3,240, with trend integrity intact as long as gold trades above $3,100.

Market Movers:

  • Berkshire Hathaway Drops as Buffett Plans Exit: Shares of Warren Buffett’s Berkshire Hathaway slid 5% after the legendary investor announced plans to step down as CEO in 2026. The stock pullback also followed a 14% drop in operating earnings for Q1, largely due to a steep 48.6% decline in insurance-underwriting profit.
  • On Semiconductor Sinks Despite Q1 Beat: On Semiconductor shares tumbled more than 8% even after the company reported better-than-expected earnings and revenue for the first quarter. 
  • Skechers Soars on Takeover Deal: Skechers surged over 24% after announcing it will be acquired by private equity firm 3G Capital for $63 per share. The deal sparked buying interest across the footwear space, with Crocs climbing nearly 5%.
  • Tyson Foods Slips on Revenue Miss: Tyson Foods shares declined 7.8% after posting fiscal Q2 revenue of $13.07 billion, missing the $13.14 billion consensus estimate. 
  • Sunoco Drops After Announcing $9B Deal: Sunoco shares fell nearly 6% following its announcement to acquire Canadian fuel distributor Parkland in a cash and stock deal valued over $9 billion, including debt. 

Markets pulled back to start the week as growing concerns over tariffs and trade deals unsettled investors. The drop in stocks, oil weakness, and gold’s strong rally all pointed to a more cautious mood ahead of key events. With the Federal Reserve’s policy decision and several major earnings reports on the way, traders are staying alert for any signs of how rising global tensions might affect the economy. For now, uncertainty around trade and policy continues to shape market direction.